Business confidence remains rocky among start-ups and SMEs ahead of the Bank of England’s projected 14th straight interest rate rise, according to a survey from the Institute of Directors (IoD).
The bout of rising interest rates and higher prices has led to business confidence remaining at minus 30 points, a one-point rise from June’s measure from the IoD.
The expected 14th rate rise in a row by the Bank of England has severely dampened business confidence despite the Chancellor’s announcement during the Spring Budget that the UK had avoided a technical recession.
View from the Industry:
Steven Mooney, CEO of FundMyPitch, commented: “Entrepreneurs and fast-growing start-ups need support from the government, investors and networks to survive and thrive despite rising interest rates and inflation, and it is more important than ever that they receive the funding and support that they need. SMEs account for a significant proportion of the UK economy, bringing innovative products and services and highly skilled jobs across the country, so at times when business confidence is down, outside forces such as the government must step in with support and guidance to ensure that the start-up ecosystem remains robust.”
Laimonas Noreika, CEO and Founder of HeavyFinance, added: “Low business confidence and access to funding not only threatens early-stage businesses but removes vital focuses such as climate action down the list of priorities while they focus on simply surviving. The government and investors have great power during periods when business confidence is low, with the capacity to provide funds and support to encourage environmentally friendly, robust business models. Putting climate and ESG at the forefront of business, through measures such as Article 9 fund investments, is essential to drive urgent climate action and have a positive impact on the environment.”
Sjuul van der Leeuw, CEO of Deployteq, concluded: “At times when there is economic turbulence, SMEs and growing businesses need to weather the storm by hugging their existing customers closely. Loyalty schemes, through measures such as email marketing, act as a great method of customer retention through targeted messages that provide perks and deals to people already familiar with and interested in a certain brand. These messages increase the chances of them becoming returning customers even during economic uncertainty. Data-driven insights can be a vital business tool when business confidence is down, helping to strategize technology and marketing decisions to fuel growth on the other side.”
Kitty Ussher, Chief Economist at the IoD, commented: “With inflation proving more persistent than was previously expected, and more firms starting to experience the negative impact of rising interest rates, there is a greater sense of caution in the air than in the spring.”